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Sri Lanka’s Sampath Bank net down over early recognition of interest loss

ECONOMYNEXT – Profits of Sri Lanka’s Sampath Bank Plc fell 36 percent to 1.32 billion rupees in the June 2020 quarter from a year earlier, with the up-front recognition of interest losses from Coronavirus moratorium and lower fee income, interim accounts showed.

The group reported earnings of 3.46 rupees per share for the quarter. For the six months to June 2020, the group reported earnings of 10.40 rupees on total profits of 3.9 billion rupees which was down 4.2 percent.

Interest income at group level fell 15.6 percent to 22.8 billion rupees in the quarter and interest expenses fell 12.2 percent to 14.7 billion driving net interest income down 21.2 percent to 8.1 billion rupees.

“The Bank’s Net Interest Income (NII) for the quarter ended 30th June 2020 was significantly affected by two factors – reduction in policy rates in order to provide relief to the economy and the moratorium granted to customers,” the lender told shareholders.

“Consequently, the day one loss on account of COVID – 19 moratorium was recorded against the interest income as per the modification method given in the Sri Lanka Accounting Standard – 9 (SLFRS – 9).

“As the entire day one loss that arose due to COVID – 19 moratorium has been recorded during the period under review, Sampath Bank does not have to incur any additional impact on interest income during the 2H of 2020.”

The bank provided 2.8 billion rupees for loan losses, down from 4.0 billion last year.

The provision was lower than last year due to higher loan losses recognized after the Easter Sunday attacks, the bank said.

Non-performing loans grew to 7.03 percent by end June from 6.37 percent in December.
Fee income fell 34 percent to 1.6 billion rupees.

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“The decline was mainly due to the decrease in credit-related fee and commission income consequent to the restrictions imposed to assist customers during this difficult period,” the bank said.

“Meanwhile, the fee and commission income from electronic channels showed strong growth owing to the high usage of Sampath Vishwa and other popular electronic products.”

Sampath Banks gross assets rose 4.6 percent to cross a trillion rupees to reach 1,045 billion rupees during the quarter.

Net assets fell 0.6 percent to 110.7 billion rupees.

Capital adequacy was 16.7 percent by end June from 18.12 percent in December, with Tier I capital at 13.3 percent by end June higher than the required 6.5 percent. (Colombo/Aug13/2020)